City Council votes to raise cost of cigarettes to $13 a pack, ban pharmacy sales

The New York City Council voted Wednesday to impose new taxes and regulations on an array of tobacco products, to bar their sale in pharmacies and to curb the sale and use of electronic cigarettes.

The package, which has the support of Mayor Bill de Blasio, will raise the price floor on a pack of cigarettes to $13 from $10.50, and smokeless tobacco and shisha packages to $17 from $8. Retailers that sell individual cigars would have to charge at least $8.

The legislation will also establish a new 10% tax on loose tobacco, cigars, cigarillos and tobacco-laced shisha, and direct the revenue toward public housing. Manhattan Councilman Corey Johnson, who sponsored several of the bills, argued the danger of tobacco use justifies the hikes.

"Tobacco use kills an estimated 12,000 New Yorkers a year," said Johnson, who chairs the council's Committee on Health. "This is unacceptable."

The new laws will also raise the cost of a cigarette retail license from $110 to $200, and bar the sale of tobacco products from pharmacies. The drug-store chain CVS stopped selling tobacco on its own three years ago.

The bills also include statutes establishing a new parallel licensing system for e-cigarette retailers, and caps the number such stores at half their current density—but allows the decrease to occur through attrition. E-cigarette dealers will not be able to sell other tobacco products.

Finally, another set of bills will outlaw the use of e-cigarettes in the halls, lobbies and other shared spaces of apartment buildings with fewer than 10 units. Vaping in the common areas of larger buildings is already illegal. Bronx Councilman James Vacca, who sponsored the legislation curtailing indoor e-cigarette use, defended his bill even though studies have not yet shown second-hand e-cigarette vapors to be as dangerous as smoke.

"I will err on the safety of the person who does not want cigarette smoke of any type in their presence," Vacca told Crain's.

Critics have pointed out that raising taxes on tobacco results in more black-market sales. Perhaps half of all cigarettes smoked in New York City are smuggled from places where taxes are lower.

But opponents have found little traction in the City Council, forcing them to resort to efforts beyond traditional lobbying.

The law firm Gerstman Schwartz Malito LLP, representing the New York Association of Grocery Stores, just penned a letter to the council accusing it of violating open meetings rules in the passage of the vaping legislation. The letter alleged that because a bill that added the term "electronic cigarettes retail dealer" to the city administrative code passed the Committee on Health on Tuesday simultaneously with the legislation establishing new regulations on such dealers, the committee must have held a previous secret meeting to arrange and ensure the passage of both measures.

Had such a clandestine meeting not taken place, the letter insisted, there would have been no way of guaranteeing both laws would pass—and the regulations could not take effect without the new terminology getting added to the city code.

City Council Speaker Melissa Mark-Viverito and council attorneys dismissed the claims as baseless. They maintained that both bills passed through normal, permitted and fully transparent processes in full compliance with open-meetings rules.

Crain’s New York Business is the trusted voice of the New York business community—connecting businesses across the five boroughs by providing analysis and opinion on how to navigate New York’s complex business and political landscape.